The SEC said last month it will pay about $50,000 to a whistleblower who helped 'stop a multi-million dollar fraud.'

The bounty program applies to securities law violations of various types. The FCPA is one type that's covered.

* * *

Although this wasn't an FCPA action, it teaches some important lessons about how the Dodd-Frank rules will work in the hands of the SEC.

First, the whistleblower asked to remain anonymous and the SEC respected the request.

Second, although SEC whistleblowers are only eligible for rewards if the SEC's recovery is a million dollars or more, the SEC can make a payout on the amount collected, even if it is less than a million dollars. In the reported case, the court ordered the defendants (the whistleblowees) to pay more than a million dollars in penalties. They were only able to come up with $150,000. But the SEC awarded 30% of that amount (the maximum percentage permitted by law) to the whistleblower.

Third, not every whistleblower will earn a reward. A second whistleblower in the same case was denied a share of the recovery. The SEC said 'the information provided did not lead to or significantly contribute to the SEC’s enforcement action, as required for an award.'

Fourth, the SEC likes information that's fresh, specific, and actionable. It said this whistleblower provided documents and other evidence that allowed the SEC to stop an ongoing fraud, saving many potential investors from being duped.

Fifth, the SEC thinks the whistleblower program is a success. “We’re seeing high-quality tips that are saving our investigators substantial time and resources,” said SEC Chairman Mary L. Schapiro.

And sixth, since the SEC's whistleblower program started in August 2011, the agency said it has received about eight tips a day. Using a conservative count, that means at least 1,600 whistleblower complaints have been filed. The SEC isn't saying how many relate to the FCPA. But the number is probably high -- penalties in FCPA cases can be enormous. The SEC also hasn't said how many of its staff are dealing with whistleblower complaints or how long it takes to process them.

_________________

The SEC's release about its first award under the Dodd-Frank Whistleblower Bounty Program is here.